Several of the world's biggest banks are in talks to put up about $75 billion in a backup fund that could be used to buy risky mortgage securities and other assets, a move designed to ease pressure on a crucial part of the credit markets that threatens the broader economy... http://www.nytimes.com/2007/10/14/business/14bank.html?ei=5065&en=6489772aacb69342&ex=1192939200&partner=MYWAY&pagewanted=print
Structured investment vehicles (SIVs) are investment companies that buy highly rated debt securities and fund themselves by issuing senior debt and capital. In recent years they have developed from a niche area into a large component of the structured finance market in the UK and other jurisdictions.http://www.iflr.com/?Page=17&ISS=17633&SID=524642
A structured investment vehicle (SIV) is an evergreen credit arbitrage fund, similar to a CDO or Conduit. They are usually from around $1bn to $30bn in size and invest in a range of asset-backed securities, as well as some financial corporate bonds. SIV is to make profits from the difference between short term borrowing rate and long term returns. The risk that arises from the transaction is mainly twofold. First of all, the solvency of the SIV may be at risk if the value of investments falls below the equity part. Secondly, there is a liquidity risk, as the SIV borrows short term and invests long term, that is the debt comes due before the asset falls due. Unless the borrower can refinance short-term at favorable rates, he may be forced to sell the asset into a depressed market. http://en.wikipedia.org/wiki/Structured_investment_vehicle
Notable SIV managers
Most SIVs are run or sponsored by banks, however a number are managed independently.
Bank Sponsors
- HSH Nordbank manages Carrera Capital Finance
- Bank of Montreal manages Parkland Finance and Links Finance
- Citigroup manage a number of SIVs including Zela Finance, Beta Finance, Sedna Finance and Dorada Finance
- Dresdner Kleinwort manages K2 Corporation
- HSBC manages Cullinan Finance
- Societe Generale manages Premier Asset Collateralized Entity (PACE)
- Standard Chartered Bank manages Whistlejacket Capital and White Pine Corp
- WestLB manages Harrier Finance
Independents
- Brightwater Capital Management manages Kestrel Funding
- Cheyne Capital Management managed Cheyne Finance
- Eiger Capital Limited manages Orion Finance
- Stanfield Global Strategies manages Stanfield Victoria
Links
http://www.risk.net/public/showPage.html?page=328506
http://www2.standardandpoors.com/portal/site/sp/en/us/page.article_print/2,1,1,0,1031342466642.html
